Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

15 Responses to “10 Tuesday PM Reads”

For those of us in the D.C. area, here’s a reception you may wish to attend on April 17th–the Space Shuttle Discovery will be arriving at Dulles (weather permitting), piggybacked on the 747, for it’s eventual installation at the Udvar-Hazy Center (Smithsonian annex in Chantilly).

Buying thousands of foreclosed homes, then fixing them and renting them to many who will tear them up and then stop paying rent? Who are they trying to fool? The bigger the residential rental home, the more folks who will cram in and destroy the place, with no one in the area minding the store.

There is no decent business model here – except to remarket the homes eventually to novice investors in the old pump and dump rehab real estate fraud. Or to sell to folks unsophisticated folks on the Land Contract scheme, assuing they default (and the contracts are written to almost guarantee this will occur) so another sucker will opt to purchase the home two years down the road.

We saw lots of that from the 1990s-2007 in our urban areas.

And as for the “lucky” homeowner who lives next door to one of these real estate syndicate’s foreclosed rentals: Good luck, which will morph shortly to “For Sale”.

Often, borrowing was disguised as an asset sale so that the borrowing receipts were classified as revenues rather than debt.
One classic form in which accounting devices operate is through “hidden borrowing.” In Europe, governments sometimes took over the pension plans of private companies or public enterprises.

In the short term, the government gained assets that appeared to reduce borrowing; but in the process it incurred a liability for future pension payments that was not immediately apparent on the government’s books.

Another instance of hidden borrowing involves currency swaps. The trickery involves cases where a nation specifies borrowing and repayments in foreign currencies at different exchange rates. Something like this got Italy into financial trouble some years ago and Greece more recently, according to the article in The Times.

The pension funds that get conned by high-priced money managers should have their boards retired. These people are ignorant… Mr. Wilbanks thinks he’s special…

When asked about the higher fees, Mr. Wilbanks, the fund’s executive director, said, “We believe the outperformance from moving into these categories can justify the additional fees.”

…he isn’t. He should be removed. All you need is to buy index funds, split between equities and bonds. Then rebalance once a year. The pension and endowment funds who choose that route will outperform their peers, over the long run. To do anything else is showing ignorance of the realities of capitalism.

Highly regarded US economist Lacy Hunt, who is executive vice president of Hoisington Investment Management, which has $US5.6 billion in assets under management, argues that the US central bank is now wary of launching a new quantitative easing program – already dubbed QE3 by the markets – because it is increasingly aware of the negative consequences of its previous QE strategies.

In an interview with Business Spectator, Hunt, who was previously the senior economist for the Federal Reserve Bank of Dallas and the chief US economist for HSBC, argues that we’ve not only had QE1 and QE2, but that there was an additional stealth QE in early December last year. He points out that at one point the US central bank expanded its balance sheet by $105 billion in order to make loans to the European Central Bank. Although this stealth QE wasn’t as large as QE1 and QE2, it was still a very sizeable amount.

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About Barry Ritholtz

Ritholtz has been observing capital markets with a critical eye for 20 years. With a background in math & sciences and a law school degree, he is not your typical Wall St. persona. He left Law for Finance, working as a trader, researcher and strategist before graduating to asset managementRead More...

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"The largest Asian central banks have gone on record that they are curbing their purchases of US debt. And they are also diversifying their huge reserves, steadily moving away from the dollar. The risks have simply become too many and too serious." -W. Joseph StroupeEditor, Global Events

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